Port to post small loss for 2006

I'm not an accountant, so was wondering how the addition of such an asset impacts our 2006 profit/loss.

Does the new assett ($1.3 Million, for which we contributed $500,000) add to our profit/loss for the year .... ie is it artificially increased by $800,000 because of the AFL grant and "in kind" contribution from Bianco. Because idf it is an artificial increase then our year off the field isn't really very good.

Malibu#27 said:

I'm not an accountant, so was wondering how the addition of such an asset impacts our 2006 profit/loss.

Does the new assett ($1.3 Million, for which we contributed $500,000) add to our profit/loss for the year .... ie is it artificially increased by $800,000 because of the AFL grant and "in kind" contribution from Bianco. Because idf it is an artificial increase then our year off the field isn't really very good.

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I'm no accountant either but I would have thought it's a different issue in that one is looking at profit/loss whilst the other is looking at assets/liabilities.........I'm sure one of our posters can explain it better though.

dreamkillers said:

I'm no accountant either but I would have thought it's a different issue in that one is looking at profit/loss whilst the other is looking at assets/liabilities.........I'm sure one of our posters can explain it better though.

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Yep - I'm hopin g REH may pop his head in as he seemed to know a bit about the subject matter in some other threads. I'd just like to know the impact.

The club effectively paid $500k for a $1.3mil asset. The money came from borrowings as our cash position is tight. So if we can make $300k net return a year on Suite One ( ie after paying say interest of 8% on $500k =$24k), as Boulton and James have stated, then that's not a bad return of 60% on our invested funds. Bianco saved our bacon this year and have helped for future years. It's a better retun on investment than The Port Club.

The club belives it will help our bottom line by $300k a year, as they talk about a net return in the annual report.

RussellEbertHandball said:

The club effectively paid $500k for a $1.3mil asset. The money came from borrowings as our cash position is tight. So if we can make $300k net return a year on Suite One ( ie after paying say interest of 8% on $500k =$24k), as Boulton and James have stated, then that's not a bad return of 60% on our invested funds. Bianco saved our bacon this year and have helped for future years. It's a better retun on investment than The Port Club.

The club belives it will help our bottom line by $300k a year, as they talk about a net return in the annual report.

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Thanks REH - I understand that bit, what I'm trying to work out is what our profit/loss would have looked like this year is the Suite One hadn't gone ahead. (On the assumption that we qwould NOT have got the grant from the AFL or the Bianco in kind donation)... ? Would this impact our 06 profit/loss ? (I can understand that it increases our asset base)

The Profit and Loss includes income from Bianco of $575k and the AFL of $250k. Bianco basically increased their sponsorship income by $575k, that's why I said above they saved our bacon this year. So SuiteOne was funded by the two income streams mentioned and borrowing $500k to build a $1.325mil asset.

I think Bianco might take up a few prime seats in SuiteOne over the next decade or two.

RussellEbertHandball said:

The Profit and Loss includes income from Bianco of $575k and the AFL of $250k. Bianco basically increased their sponsorship income by $575k, that's why I said above they saved our bacon this year. So SuiteOne was funded by the two income streams mentioned and borrowing $500k to build a $1.325mil asset.

I think Bianco might take up a few prime seats in SuiteOne over the next decade or two.

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Thanks ... its what I was suspecting ... basically without them we would have had a hefty loss.

The funny thing is that Nick Bianco is a crows supporter. He sponsored Port because we were the only ones who asked him.

Malibu#27 said:

Thanks ... its what I was suspecting ... basically without them we would have had a hefty loss.

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Yes, provided we didn't do anything else. If we didn't build Suite One, the club may have delayed or cut other expenditure or brought forward other income. For example the foundation raffle that had a 151,000 tickets at $5 each and finished around the 30th of October but it was drawn in November. I don't know in which year this income is shown in. I reckon the club would have made sure that a small profit before the SANFL fee would have been made in 2006 either way.

Ford Fairlane said:

The funny thing is that Nick Bianco is a crows supporter. He sponsored Port because we were the only ones who asked him.

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We actually have a few sponsors like that but once they have come on board they have been very happy with their investment.

Next question then. Would Bianco have donated the $575k they spent on SuiteOne anyway? If they are a regular sponsor could it be that they donated in kind rather than cash this year?

Toots Hibbert said:

Next question then. Would Bianco have donated the $575k they spent on SuiteOne anyway? If they are a regular sponsor could it be that they donated in kind rather than cash this year?

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Pretty obvious answer to this..........

You'd have to ask Bianco or the club that question as it won't be answered in anything sent out to members.......and I doubt if you asked them that you would get an answer given most sponsorship/financial contracts between the club and sponsors are confidential.

Quck question: What is Suite One?

dreamkillers said:

Pretty obvious answer to this..........

You'd have to ask Bianco or the club that question as it won't be answered in anything sent out to members.......and I doubt if you asked them that you would get an answer given most sponsorship/financial contracts between the club and sponsors are confidential.

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No doubt. I got to thinking following the comment about Bianco saving our financial bacon.

I mean, sponsors would save every club's bacon. I guess you get those like Tony Santic who give because they love the club but many sponsors do so because they derive a benefit in return.

From my limited knowledge it seems to me that the club has done better financially than we were thinking a while back.

Toots Hibbert said:

No doubt. I got to thinking following the comment about Bianco saving our financial bacon.

I mean, sponsors would save every club's bacon. I guess you get those like Tony Santic who give because they love the club but many sponsors do so because they derive a benefit in return.

From my limited knowledge it seems to me that the club has done better financially than we were thinking a while back.

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In terms of sponsorship income we would be in the top 4-6 clubs overall.......it's the membership side of things that let us down a little but even that in the medium to long term will improve.

The club is aiming to reduce it's debts over the next 2-3 years which will see even more improvement in the club's bottom line.

MrMeaner said:

Quck question: What is Suite One?

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It's a high class dining room, seats, like a small convention room in the Northern concourse, the crows have one down the Southern End called the Premiers club, which they have had since 2003 by memory. Once that was built the SANFL was obliged to make room for ours down the Northern End and have just been waiting till we had finances to build it.

I remember cause at the time the crows were selling spots in theirs for our finals in 2004 and asked B.C how the hell could they do that.

If you want to compare us to other clubs and in particular the statistical average club then this is a good document to look at from the AFL website;
2005 Club Financial Review - Survey Results Media Briefing 11 April 2006
This is a power point presentation. For some reason it doesn't tell you what individual clubs made but has their figures in bar graphs and pie charts. From an article about this from The Australian on 1st June which I kept, the following are the Net Stadium Returns.

WCE $10.93 mil
Bris $10.84
Col $10.3
Fre $10.29
Syd $7.62
Ess $7.49
Adl $7.28
Clt $7.18
Gee $7.06
Mel $6.1
Stk $6.03
PA $5.93
Haw $5.65
Ric $5.57
Kan $5.14
WB $4.64

Average $7.38. Victorian Average $6.52. You will see these figures in the bar graph in slide 6 but they don't put which club belongs to what column. You will also note that the AFL ignores distributions back to state footy associations for comparing the 16 clubs on a like basis.

Net Stadium return is the revenue figure which includes gate receipts, signage, membership, reserved seating, catering and corporate hospitality, less the expenditure for ground rental and match day costs. So when you look at the $1.35 mil difference in 2005 between the Crows and Port, most of this, if not all is made up from the fact that the Crows have at least 10,000 more adult members and season ticket holders than us. When you factor in the Footy Park Category 1 memberships the difference probably is somewhere around 13,000 members.

Another thing to note is that Port's turnover is higher than the Crows. That's because of the Port Club. But this has revenues of $4.2mil and expenses of $4.1 mil which the Crows don't have. The SANFL sucks up most of the Crows pub/club revenue by owning The Crows Tavern.

In 2006 the Crows increased their kids memberships from 2,300 to 6,100. Most of these memberships didn't get them into a game but good on them for developing a package for their kids. We should try to match them as we have about 4,800 junior members.

The AFL in 2007 and beyond, will give those clubs who have a net stadium return of less than the Victorian average an additional distribution. In 2007 Port will receive $250k. All this info was in the Next Generation documents the AFL released in September.

You will note that WCE and Freo are way ahead of the Crows and Port for net stadium returns, yet Subi holds 8,000 less than Footy Park. The reason for this is that the SANFL have members and Subi oval doesn't and the SANFL take in most of the catering revenue, sponsorship signage and corporate boxes revenue. At Subi the clubs have the right to sell these facilites and earn the income in their books. The WAFC charge WCE and Freo more rent for the ground than the SANFL charges the two SA clubs and the 2 WA clubs are still on a % of profits distribution. A couple of years ago it was amended from 80% to sliding scale, I think it's 70% for the first mil, 60% for the second, and 50% for the rest. Because the WAFL/WAFC never owned Subi until the government stepped in the early 90s, the WCE have basically been paying for the interest part of the loans on Subi and the subsequent redevelopment. The best thing that the SANFL ever did was build Footy Park.

One last point from the article in the Oz in June, Sydney spent a record $14.51mil on it's football department in 2005, almost $3mil more than the average and a record $9.368mil on player payments which was $1.8mil more than the average. [This amount includes standard TPP plus the Sydney cost of living allowance, plus 4 finals match payments, plus injury payments, plus other allowances.]

Paralowiepower said:

It's a high class dining room, seats, like a small convention room in the Northern concourse, the crows have one down the Southern End called the Premiers club, which they have had since 2003 by memory. Once that was built the SANFL was obliged to make room for ours down the Northern End and have just been waiting till we had finances to build it.

I remember cause at the time the crows were selling spots in theirs for our finals in 2004 and asked B.C how the hell could they do that.

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Thanks for that. No wonder I had not heard of it: I am neither in South Australia nor high class .

Ford Fairlane said:

The funny thing is that Nick Bianco is a crows supporter. He sponsored Port because we were the only ones who asked him.

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Maybe those Italian nights the club puts on have gone down well. IIRC Bianco started off supporting Campbelltown Soccer club, then Adelaide United and then Port. I guess the profile grew as the business did. My cousin used to work there and was involved with Campbelltown Soccer club.

dreamkillers said:

I'm no accountant either but I would have thought it's a different issue in that one is looking at profit/loss whilst the other is looking at assets/liabilities.........I'm sure one of our posters can explain it better though.

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The money from the AFL and your sponsor will be via a Grant (AFL) and either sponsorship revenue or donation from your sponsor, those will be counted as income. It will impact on the profit/loss, although the income is extraordinary if it is part of a one-off scheme which this suggests it is (not normal income part of your operating proft/loss).

Similarly, the Bulldogs actually made a $4.2 million book net profit this year when they received the supporter generated funds for their rennovation but chose to accurately reflect what was their operating loss that they actually made for the year.

In terms of the Balance Sheet, it will appear there in total as an asset. There will be no liabilities or equity offset. It will bump up your asset base but will have artificially boosted the profitability this year unless Port disclosed that profit amount as their operating profit. This is all assuming you had received the funds from the AFL and the sponsor by the end of the financial year.